There is no doubt that real estate continues to be a strong investment. That is likely the reason we have seen new platforms, such as Roofstock, Fundrise, and RealtyMogul.
Each platform takes a solid form of investment in real estate and makes the process a whole lot easier. Not only that, but they also make real estate investing more accessible for the average investor.
Thus, this post will look at Roofstock vs. Fundrise vs. RealtyMogul to help you decide where you should invest your next chunk of change.
What is Fundrise?
Fundrise is a real estate crowdfunding platform that allows investors to pool their money to buy large, commercial real estate properties.
With a minimum investment of $500, Fundrise substantially
lowers the barrier to entry for commercial real estate investing. It does come with its own set of pros and cons, however, which we will cover in this post.
Features
Fundrise has four different account levels, each with their own minimum investment:
- Starter - $500
- Core - $1,000
- Advanced - $10,000
- Premium - $100,000
Here, we’ll take a look at what you get for each investment level.
Starter
As you can likely guess, Starter is the most basic account level and offers the fewest perks. At this level, you can invest your $500, but you can’t invest in individual funds.
In other words, at this level, you can’t actually invest in properties of your choice. So while this option isn’t bad for someone who is just starting out, those wanting the true crowdfunding experience will have to upgrade.
Core
Investing in the Core plan gives you access to a number of features, including eREITs and the choice of three different plans: Income, Balanced, and Long-Term Growth.
Thus, you’ll have the choice of investing in an eREIT that aligns with your investing goals.
You also gain the ability to open a self-directed IRA at this level. This allows you to use your IRA to invest in commercial real estate. You also get 3 months of advisory fees waived for each referral.
Advanced
Advanced plans give you the option to invest in eFunds. These funds invest in for-sale housing for first-time, move-up, and active adult homebuyers in Los Angeles.
This level also allows you to allocate directly to most of Fundrise’s funds plus 6 months of advisory fees waived for each referral.
Premium
With the Premium plan, you gain priority access to Fundrise’s investments team plus 12 months of advisory fees waived for each referral.
Fees
The basic fee structure for Fundrise investments is a 0.15% advisory fee (waived with referrals), plus a 0.85% asset management fee charged by eREITs and eFunds in your Fundrise portfolio.
That adds up to a 1% annual fee, which is slightly high, though still lower than what a human financial advisor would charge.
Also note that Fundrise may charge other fees depending on the investment and circumstances. These include development costs, disposition fees, and penalties for premature redemption.
Fundrise Pros and Cons
Fundrise has its own set of pros and cons. Let’s take a look at what they are.
Pros
- Low minimum investment - only $500 required to get started.
- Fees are relatively low.
- You don’t have to be an accredited investor.
- You can choose between multiple investment strategies.
Cons
- You can’t select your investment strategy with the Starter plan.
- Fees can be complicated in some scenarios.
- Investments are illiquid despite not directly owning properties.
Get started with Fundrise to invest in its REITs.
What is Roofstock?
Roofstock is a real estate investment marketplace that allows investors to purchase single-family homes. Roofstock doesn’t actually involve pooling money with other investors; instead, you own your properties directly.
Thus, Roofstock isn’t exactly a crowdfunding platform in the truest sense of the word. Nevertheless, it has been labeled as real estate crowdfunding at times.
This certainly raises the minimum investment, but it does allow you to own investment properties directly. Plus, you are able to finance your investment properties if necessary.
Still, that does leave you with a greater minimum investment. Even if you finance your rental properties, you would likely have to make a 20% down payment.
Roofstock does offer a service called Roofstock One which is actually does work more like crowdfunding. This service allows you to buy shares in rental homes, and the minimum investment is $5,000.
Features
The main feature of Roofstock is that it streamlines the whole process of buying investment properties. Normally, you would have to find your properties, property management company, financing, and so on, in separate places.
Roofstock also arranges inspections for you; in fact, many of the properties are already occupied. The result is that Roofstock becomes a one-stop-shop for the entire investment property acquisition process.
It also provides plenty of information on each property, including photos, projected investment performance, neighborhood ratings, and property inspections.
And because Roofstock helps you find a property management company, there’s no need to live in the city where the homes are located.
This has all been from the perspective of the potential buyer, but note that Roofstock supports both purchases of and sales of investment properties.
Fees
Fees for Roofstock are a bit simpler than they are with Fundrise. There is just one fee structure each for buyers and sellers:
- Buyers - $500 or 0.5% of the sale price (whichever is greater).
- Sellers - $2,500 or 3.0% of the sale price (whichever is greater).
Roofstock Pros and Cons
Let's take a look at the pros and cons we can expect from a Roofstock investment.
Pros
- Fees are relatively low and there are no ongoing fees.
- Thorough home inspections.
- You own your own properties.
Cons
- Large down payments (except when using Roofstock One).
- Owners pay for repairs
- Investments are not liquid (as is usually the case with real estate).
Join Roofstock to buy your first rental property.
What is RealtyMogul?
RealtyMogul is a real estate crowdfunding platform that allows you to invest in commercial real estate. As an investor, you use RealtyMogul's online dashboard to invest directly on the platform.
RealtyMogul was founded in 2012 and allows investors to participate in the commercial real estate sector. The minimum investment for RealtyMogul is $5,000 which may seem high at first. After all, there is an increasing number of stock investment platforms that allow people to invest $1 or less.
However, it's the same minimum as Roofstock, which focuses on residential properties. Being able to invest in commercial real estate for $5,000 is actually a great opportunity. Plus, it's always possible to start with residential properties and progress to commercial properties later.
The other benefit of RealtyMogul is the potential for high returns. Private placement investors can see returns as high as 15%. Its REITs, however, offer returns in the range of 4% to 8%.
Features
RealtyMogul allows you to invest in commercial real estate directly on its platform. You do everything within its system and the entire process is streamlined.
Then, RealtyMogul works with developers behind the scenes, submitting deals and examining the terms. RealtyMogul says it receives thousands of deals per year, bur only 1% are accepted.
In terms of investment options, RealtyMogul has two REITs:
- MogulREIT I - Invests in commercial real estate equity and debt assets.
- MogulReit II - Invests in equity investments such as multifamily apartments.
RealtyMogul also features a REIT buyback program, but it depends on available capital. Plus, you may have to pay fees of up to 2%.
Fees
Other than the fees you'll incur if you participate in the REIT buyback, there are fees for each of the REIT, as follows:
- MogulREIT I - 1% orf your total equity value.
- MogulReit II - 1.25% of your total equity value.
RealtyMogul Pros and Cons
And now, here are the pros and cons of RealtyMogul.
Pros
- High rates of return
- Open to non-accredited investors
- REIT buyback program
Cons
- Short track record
- Complex investment option
- High investment minimum
Join RealtyMogul to start investing in commercial real estate.
Comparing Roofstock, Fundrise, and RealtyMogul
Fees | Minimum Investment | Accreditation Required? | Best for | |
|---|---|---|---|---|
Roofstock | Greater of 0.5% or $500 | $5,000 (Roofstock One) | Only for Roofstock One | Property ownership |
Fundrise | 1% | $500 | No | Low minimums |
RealtyMogul | 1% or 1.25% | $5,000 | No | Commercial real estate |
Summary
Roofstock, Fundrise, and RealtyMogul all have great opportunities for people who want to invest in real estate. That said, the platforms are quite a bit different and neither will be right for everyone.
Roofstock’s main service allows you to directly own your investment properties. Plus, fees are low and there are no monthly or annual fees.
However, down payments are going to be high with Roofstock, unless you opt for Roofstock one. Roofstock one has a somewhat more reasonable minimum of $5,000, which is much lower than a typical down payment.
For its part, RealtyMogul is another investment platform focusing on commercial real estate. While its minimum investment is much higher than that of Roofstock, it has the same minimum as Roofstock.
Both Roofstock and Fundrise have the downside of a lack of liquidity. While this is to be expected with real estate investments, it would be nice if there was some investment option that could address the liquidity issue.
On the other hand, RealtyMogul offers investors some liquidity with its REIT buyback program.
All three platforms are strong investments and a good way to bring in supplemental income or long-term growth. However, which one is right for you depends on your investment style and goals.
If you’re interested, go ahead and check out Fundrise, Roofstock, or RealtyMogul.
